Tag Archives: Veronique de Rugy

President Obama’s top budget adviser wants federal agencies to identify “laggard programs” that they can trim as a step toward reducing spending by 5 percent. The idea is to “make it easier” to comply with the president’s plan to freeze some federal outlays for three years beginning with the 2011 federal budget.

But there are caveats and exceptions. Budget Director Peter Orszag said in a speech Tuesday to the Center for American Progress that the proposed cuts would not begin until 2012 and would apply only to non-defense and non-security-related agencies. In other words, the Pentagon and Department of Homeland Security would be immune — so too would be entitlements such as Social Security.

In addition, it appears the 5 percent pinch is not mandatory on the bureaucracy. “We are asking each agency to develop a list of their bottom 5 percent performing discretionary programs, as measured by their impact in furthering the agency’s mission,” Orszag said.

— The case for cutting or eliminating ineffective programs is always strong.
— That issue is logically independent from the case for reduced overall spending, which is weak in the short term.
— The case for lower-than-projected long-term spending is strong, but this is primarily a matter of health care costs.
— “Defense” and security-related spending can’t be exempt from fiscal scrutiny. Montgomery reports that Defense Secretary Robert Gates “seems to be something of a budget-cutting inspiration for Obama” but the ask here is much bigger in percentage terms that anything Gates has proposed for the Pentagon.
— It’s never a good idea to just look at “spending” without scrutinizing tax expenditures.

Which is all just to say that I believe in what we at CAP call doing what works and not doing what doesn’t work. But I don’t like to see the objective of trimming or eliminating ineffective programs run together with with discussions of fiscal policy as a macroeconomic matter. It’s also worth noting that though the concern in public opinion about wasteful government spending is very real, it’s not clear that the public’s idea of “waste” corresponds very closely to a wonk’s conception of an ineffective program. People tend to like programs that they think benefit them, or people like them, and view other programs as wasteful. What’s more, bad economic times erode faith in public institutions and make people more inclined to see programs as wasteful. That’s really a different issue from the wonk’s worry about programs that don’t work well.

This spasm of fiscal responsibility can mean only one thing: the Obama administration is about to go on another wild spending binge. And sure enough Politico reports that while Blue Dogs in the House managed to whittle what was a $200 billion “jobs” bill down to $146 billion last month, the Senate is now larding it back up again with a $24 billion Medicaid bailout and a $23 billion teachers union bailout.

There’s plenty of waste to go after. In 2004, Heritage budget expert Brian Riedl listed duplicative programs that could, but have not yet been, eliminated. These include 343 economic development programs, 130 programs serving the disabled, 130 programs serving at-risk youth…the list goes on. Riedl explains that “having several agencies perform similar duties is wasteful and confuses program beneficiaries who must navigate each program’s distinct rules and requirements.” Moreover, duplicity in government programs makes it more difficult for each one to achieve its goal.

Wasteful spending doesn’t stop at program redundancy, either. In Heritage’s 2010 edition of Federal Spending by the Numbers, Riedl points to plenty of areas where lawmakers could make painless cuts. For example, Washington spends $25 billion each year to maintain unused or vacant federal properties, and $92 billion on corporate welfare. Then there’s the less costly but no less absurd $2.6 million that Washington spends to train Chinese prostitutes to drink more responsibly.

In the last five years, Government audits have shown that 22 percent of all federal programs fail to show any positive impact towards their intended objectives yet cost taxpayers $123 billion? Million? annually.

However, this should be seen as just the beginning. To have a profound impact, more drastic changes will be needed. This proposal alone would create at most $20 billion in savings, addressing just 2 percent of the federal deficit. The next step should be deep impact reforms such as repealing the stimulus and the trillion plus health care bill, and enacting major entitlement reform, targeting the unfunded liabilities created by Medicare, Medicaid, and Social Security.

Finally, the White House’s budget cuts wouldn’t require agencies to report on expendable programs until September 13, and effects wouldn’t occur until 2012. If the White House is serious about cutting spending, they could—and should—start right now. The Impoundment Control Act of 1974 gives the president the ability to rescind enacted spending by sending a message to Congress with directions, which a Member can then introduce in a bill. Since 1974, presidents have submitted 1,178 rescissions totaling $76 billion. Since Republicans expressed their desire for the president to offer a rescission package, an immediate request from the president would be almost sure to come to a vote in the House.

Baby steps towards fiscal responsibility are a positive turn for the administration, but to show the American people they mean business, the White House should also begin cutting spending immediately and pursue reform with larger impact on the federal deficit.

According to the Post, though, many budget analysts around town are complimentary about the proposal. Well, I guess I am just hard to please, because I think this is a joke. The federal government is spending almost $4 trillion this year. Our deficit is $1.4 trillion. Our debt held by the public is $7.5 trillion. Our long-term entitlement deficits are huge and growing. All of thesefigureswill be larger the next time I blog about them. I don’t have much patience for agencies that need to be given incentives to do what is right. This money isn’t theirs. It’s taxpayers’ money, and the spending needs to stop.

But then again, considering that the Deficit Commission itself needs to be bailed out by the White House, nothing should surprise me anymore. See Daniel Foster on the issue here. And speaking of commissions, my colleague Jerry Brito has a very good study on the BRAC Commission of the late 1980s and early 1990s. It just came out last month and is very informative about the likelihood that today’s Deficit Commission will succeed. A shorter version of his study is here.

The federal deficit has stretched to $941 billion in the first eight months of Fiscal Year 2010, and politicians are getting nervous that all that red ink is starting to stink. That puts the White House in the awkward position on standing behind more stimulus — which would raise the deficit — while claiming the mantle of fiscal responsibility. How do you pull that off?

Well, you suggest small-ball reforms — or, as some critics contend, gimmicks. First, President Obama has proposed a three-year freeze on non-security discretionary funding, which amounts to about a fifth of the budget. Second, he’s requested the authority to lightly edit spending bills and send them back to Congress for an expedited vote without amendments. Third, he’s asking agencies to make plans to cut 5% of their budget.

These ideas tend draw much mocking from politicians and the commentariat, and maybe it seems a little weird to grow a trillion-dollar deficit and pare it down with limited freezes (like planting a Redwood and pruning it with a nail file). But I see nothing wrong with these ideas. They’re non-binding, forward looking, and potentially useful. Do we think government agencies should never have to identify programs they consider marginally unecessary? Is it pointless to even threaten to rein in earmarks with a light veto power? We should be running a large deficit in 2010, and we should be thinking about small ways to improve our medium-term budget.

The news in Peter Orszag’s speech this morning is that the White House is “asking each agency to develop a list of their bottom 5 percent performing discretionary programs” in order to make cuts more obvious. On the one hand, reducing inefficient spending is good. On the other hand, reducing aggregate spending is not, at the moment, a good idea. This 5 percent isn’t much in the scheme of things, but it’s a buy-in to the idea that deficits are too high right now rather than an effort to convince people that the time for countercyclical spending hasn’t passed.

So that’s not the news in the speech. But it’s also a small part of it. The bulk of the address is about the need to modernize the federal government’s IT infrastructure, and it’s worth reading. Orszag notes, for instance, that “public sector productivity growth matched the private sector’s until about 1987,” at which point it began falling rapidly behind. If you’ve identified this as roughly coinciding with the rise of personal computing and the Internet eras, well, ding-ding-ding.

“At one time,” Orszag says, “a federal worker went to the office and had access to the most cutting-edge computer power and programs. Now, he often has more of both in a device clipped to his belt.” Oh, snap!

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

[…]

In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.

The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.

The WSJ piece is based on research that Klein did a few months ago with his co-author, Columbia University psychologist Zeljka Buturovic. Among other things, they show that thinking like an economist is not correlated to going to college. They also find that it is the highest among those self-identifying as “conservative” and “libertarian,” and descends through “moderate,” “liberal,” and “progressive.” Other variables include party affiliation, religious participation, union membership, NASCAR fandom, and Walmart patronage. Their results were originally published here.

I like beating up on progressive economics as much as any conservative blogger, but this looks a lot like a test designed to produce a result, not an objective analysis. Besides, we’re getting a real-world demonstration of progressive economics over the last sixteen months. We don’t need a Zogby survey to tell us that it fails; all we need to see are the job-creation numbers coming this year, and the precipitous drop in mortgage applications.

[…]

As it happens, I agree with the scoring on these, but some of them are at least arguable. The rent-control question, for example, prompts a chicken-and-egg argument. Rent control doesn’t happen in a vacuum, but usually in a market where housing shortages already exist for other reasons (high population, overly strict zoning requirements, and so on.) A “disagree” on that question might well hinge on a disagreement over the source of the shortage, which is at least a reasonable question to ask. Likewise, the answer to the question of exploitation of Third World workers being exploited is probably not a yes/no answer, but a matter of degree, and of whether the “exploitation” tends to benefit both parties or just one to the exclusion of the other, and the answer is not going to be the same in every single instance of Third World outsourcing.

But I suspect that Klein and the people who will quote this survey don’t care for nuance and substance as much as they will want some ammunition in the who’s-dumber war among pundits. This is every bit as substantial as the previous salvos, which is not saying much at all, but therefore it has some terrific tu quoque value. Sling away!

What kind of undifferentiated mass of simmering, modernity-hating humans have we allowed ourselves to believe the world’s billion-plus Muslims have become? I’ve known three Muslims well in my lifetime. The first was a semi-notorious, trenchcoat-wearing ethnic Albanian Macedonian video pirate, with a frequently illegal smile and a heart of gold. He was fond of upbraiding Americans like me for failing to appreciate the genius that is Giant Sand. The second was that dude’s best friend, yet 100% different–a practicing Muslim and chain-smoking teetotaler, who also looked like Nick Cave even more than he insisted on listening to the ultra-violent “O’Malley’s Bar” over and over again. Had about a thousand college degrees, spoke even more languages, and talked almost exclusively in the dialect of Pulp Fiction. The third was an assholish Bosnian refugee who stayed with me for a while, making fantastical claims about his family’s influence back home while hatching unreasonable plots about becoming the next Bill Gates. He ended up emigrating to the States, and becoming a successful software guy. Each was totally different than the other, richly profane, thoroughly versed in pop culture. That is to say, they were individuals, each with their own agency (even during the hardship of war), and downright enthusiastic about the rough give-and-take between cultures, religions, nationalities, and music fanbases. I would no more consider protecting their delicate sensibilities from images of the Prophet than they would refrain from calling me and other Americans dull-witted beasts.

We are having an Everyone Draw Mohammed Contest tomorrow not to gratuitously insult my old pals or any other practitioners of a richly diverse religion, we are doing it as a simple declaration that depiction and caricaturization is within the bounds of acceptable discourse, that nobody owns the images of historical figures, and that free-speech backsliding in the West ultimately threatens all of us much more than isolated acts of semi-suicidal bravado from the pathologically aggrieved. I refuse to believe we are sharing the planet with 1 billion sleeper agents, ready to be activated by a cartoonist’s pen.

Today, bloggers around the world will participate in a protest against terrorists by drawing cartoons of the Muslim prophet Mohammed. Everyone Draw Mohammed Day started when terrorist threats against Comedy Central pushed its executives to heavily censor an episode of South Park, which still cannot be seen on the South Park Studios website. It got off to an inauspicious start, though, when its creator backed out of the event, citing concerns about being overly provocative.

That’s a good point to consider, especially if one goal of the war on terror is to push an Enlightenment of sorts onto global Islam. A “hearts and minds” campaign, as we discovered in Vietnam, requires some sympathy and understanding of the entire community. If we’re insulting a broad class of Muslims by celebrating what appears to be a heresy in their eyes, we’re pushing them closer to the radicals and not isolating the terrorists. Given the images being celebrated on Facebook’s EDMD page, it won’t be too difficult to see this as an attack on their religion altogether.

On the other hand — and this is where my sympathies lie — a free society has to have the ability to offend as part and parcel of the freedom of expression. To acquiesce to the pressure that cowed Comedy Central is to surrender that freedom and to make terrorism a successful strategy, and not just for radical Islam. A nation of laws provides its citizens freedom from vendettas, and where vendettas succeed, freedom is diminished or lost altogether. That is why it is always un-American to seek political change through violence and terrorism, because it cuts against the fabric of what makes us Americans. In order to stand against the vendetta mentality, we need to make a statement that we will not be cowed into silence and surrender, whether that’s defined as dhimmitude, omerta, or whatever.

Today is Everybody Draw Mohammed Day, a completely made-up satirical “holiday” dedicated to the concept of drawing Mohammed cartoons, as a way of making a statement about freedom of speech.

Not everyone agrees with this idea, however. And I’m not just talking about the expected naysayers — that is, fundamentalist Muslims (who demand that no one be allowed to depict their prophet) and progressive multiculturalists (who run interference for fundamentalist Muslims by insisting that we all obey Islamic demands or risk being branded as racists).

No, even some level-headed conservative-leaning pundits have begun to cast aspersions on this whole Mohammed cartoon thing. Most notable among them is J.E. Dyer, whose recent article posted at HotAir entitled “Provocation isn’t the highest form of free speech” made the argument that mocking Mohammed is basically pointless “provocation” and that, although provocative speech is protected, it is the embarrassing stepchild of the noble, high-toned political speech imagined by our forefathers, and as such should be avoided lest we come off as brutes and rubes. To quote the key passage of Dyer’s thesis,

The right to offend others is something that gets a pass because of the good that comes from the better, higher, more important right to make our own philosophical decisions. The right to be deliberately offensive is a parasite, not a first principle.

This is not an argument over the right to be “provocative” or “offensive”; rather, it is something much more significant — an argument over who gets to determine what counts as provocative or offensive in the first place. The Western world dragged itself out of the church-dominated Dark Ages and into the Enlightenment in part over this precise issue: the freedom to engage in speech and actions which formerly had been classified as the crime known as “blasphemy.” It seems such a trivial and quaint issue in retrospect, and hardly worthy of note from our hyper-secularized 21st-century perspective, but tell that to the millions of people who for centuries lived under the yoke of governments which used accusations of blasphemy and other religious misbehaviors as a primary tool of tyranny and oppression. The modern world dawned with the American and French Revolutions and the emergence of the explicitly secular state — the Americans rejecting the Church of England as Britain’s legally enforced national religion, and the French shrugging off centuries of acquiescence to domination by the Catholic Church in civil affairs. In both cases, new governmental paradigms were established in which there was an inviolable separation of church and state, which in practice meant no civil laws enforcing religious doctrines and (most importantly for our discussion) no laws against blasphemy.

If you’ve been reading this blog regularly for years, you know that dhimmitude at social networking and Web2.0 sites is nothing new. Nor is dhimmitude in the MSM or in higher education or in Washington. It’s the Achilles’ heel of Western civilization.

In honor of Draw Mohammed Day today, I’m reprinting below the post I published on January 1, 2006 during the original Mohammed Cartoon conflagration and the post I wrote at the end of 2006 on the deceit behind the manufactured Mo outrage.

I don’t like the in-your-face message that we don’t care about what other people hold sacred. Back in the days of the “Piss Christ” controversy, I wouldn’t have supported an “Everybody Dunk a Crucifix in a Jar of Urine Day” to protest censorship. Dunking a crucifix in a jar of urine is something I have a perfect right to do, but it would gratuitously hurt many Christian bystanders to the controversy. I think opposing violence (and censorship) can be done in much better ways.

At the same time, real artists like the “South Park” guys or (maybe) Andre Serrano should go on with their work, using shock to the extent that they see fit. Shock is an old artist’s move. Epater la bourgeoisie.Shock will get a reaction, and it will make some people mad. They are allowed to get mad. That was the point. Of course, they’ll have to control their violent impulses.

People need to learn to deal with getting mad when they hear or see speech that enrages them, even when it is intended to enrage them. But how are we outsiders to the artwork supposed to contribute the the process of their learning how to deal with free expression? I don’t think it is by gratuitously piling on outrageous expression, because it doesn’t show enough respect and care for the people who are trying to tolerate the expression that outrages them.

Islam is not above question, criticism, critique, or examination. In fact, Islam is fourteen centuries overdue for some serious questioning, criticism, critiquing, and examination. People the world over need to be reminded that the freedom of speech most certainly includes the freedom to offend. The right of non-Muslims to draw pictures of Muhammad is equaled by a right just as powerful, the right of Muslims to ignore pictures they find offensive.

Though I can’t believe I am going to quote Captain Jean Luc- Picard, there is no better way to express why tomorrow’s world-wide event is so important:

“We’ve made too many compromises already, too many retreats. They invade our space and we fall back. They assimilate entire worlds and we fall back. Not again. The line must be drawn here! This far, no farther!”

While Picard goes on to say that he will “make them [the Borg] pay,” that’s not our job. Our job is to stand and defend free speech. No more outrageous outrage and Muslim grievance theater over cartoons, operas, and videos.

We will no longer retreat. We will no longer fall back. We will no longer demand from every other community on the face of the planet that they meet us on the playing field of civilized, rational discourse, yet carve out a special, protected, no-holds-barred zone for Islam.

It’s over. This far and no farther. No more special treatment. It is time for Islam to come into the 21st century.

I initially had mixed feelings about Everybody Draws Mohammed Day. Provocation for its own sake is one of the dreariest features of contemporary culture, but that’s not what this is about. Nick Gillespie’s post reminds us that the three most offensive of the “Danish cartoons” — including the one showing Mohammed as a pig —were not by any Jyllands-Posten cartoonists but were actually faked by Scandinavian imams for the purposes of stirring up outrage among Muslims. As Mr Gillespie says:

It is nothing less than amazing that holy men decrying the desecration of their religion would create such foul images, but there you have it. It is as if the pope created “Piss Christ” and then passed it off as the work of critics of Catholicism.

So, if it really is a sin to depict Mohammed, then these imams will be roasting in hell. (Unless, of course, taqqiya permits Muslims to break their own house rules for the purpose of sticking it to the infidels.)

But, that aside, the clerics’ action underlines what’s going on: the real provocateurs are the perpetually aggrieved and ever more aggressive Islamic bullies — emboldened by the silence of “moderate Muslims” and the preemptive capitulation of western media. I was among a small group of columnists in the Oval Office when President Bush, after running through selected highlights from a long list of Islamic discontents, concluded with an exasperated: “If it’s not the Crusades, it’s the cartoons.” That’d make a great bumper sticker: It encapsulsates both Islam’s inability to move on millennium-in millennium-out, plus the grievance-mongers’ utter lack of proportion.

I’m bored with death threats. And, as far as I’m concerned, if that’s your opening conversational gambit, then any obligation on my part to “cultural sensitivity” and “mutual respect” is over. The only way to stop this madness destroying our liberties is (as Ayaan Hirsi Ali puts it) to spread the risk. Everybody Draws Mohammed Day does just that. Various websites are offering prizes. I only wish we could track down those sicko Danish imams* who drew their prophet as a pig, and send them the trophy

There are two schools of thought about the Reagan tax cuts. The conventional conservative view: They spurred investment, entrepreneurship, and real economic growth, helping to resuscitate the post-Carter economy, and, by doing so, they paid for themselves. The conventional liberal view: They were an ill-considered product of starve-the-beast ideology and produced crippling deficits, inaugurating a new era of fiscal irresponsibility only briefly transcended during the golden years of the Clinton presidency.

Here’s a different take: They never happened.

Properly understood, there were no Reagan tax cuts. In 1980 federal spending was $590 billion and in 1989 it was $1.14 trillion; you don’t get Reagan tax cuts without Tip O’Neill spending cuts. Looked at from the proper perspective, we haven’t really had any tax cuts to speak of — we’ve had tax deferrals. Reagan and his congressional allies had an excuse in the considerable person of Speaker O’Neill. But George W. Bush and the concurrent Republican majorities in both houses of Congress didn’t manage to cut spending, either. Part of that was circumstances — 9/11, Afghanistan, Iraq, the subprime meltdown — but part of it was the fact that a poorly applied supply-side analysis has infantilized Republicans when it comes to the budget. They love to cut taxes but cannot bring themselves to cut spending: It’s eat dessert first and leave the spinach on the table.

There is some evidence that this is both bad politics and bad policy. Many conservatives were disheartened by the Republican spending excesses of 2001–06, and abandoned the GOP in the elections of 2006 and 2008. And you may have noticed that our parks and public spaces are from time to time filled with rowdy tea-party demonstrators hollering for Washington to drop anchor post-haste on the USS Appropriations, which is nonetheless steaming on at a nauseating clip. Spending cuts are always popular in theory and detested in practice, but the deficit is now truly terrifying, and, fortunately for Republicans, it is owned by Barack Obama and Nancy Pelosi. Our gross national debt is about 80 percent of GDP today and will be nearly 100 percent by 2012. If the government applied any sort of reasonable accounting standard to its future liabilities — if it were taking the same write-downs on Social Security and Medicare that the Fortune 500 are taking on Obamacare — then our real liabilities would far exceed GDP. It’s ugly, and the numbers suggest that we aren’t going to grow our way out of it: Despite all those pro-growth tax cuts, our deficits continue to grow faster than our economy. That’s been especially true during the Great Recession, but even during periods of strong economic growth, there has been nothing to indicate that our economy is going to grow so fast that it will surmount our deficits and debt without serious spending restraint. This should be a shrieking klaxon of alarm for conservatives still falling for happy talk about pro-growth tax cuts and strategic Laffer Curve optimizing.

Some people are more sensible about that Laffer Curve talk. Laffer, for instance. Arthur Laffer, whose famous (and possibly apocryphal) back-of-the-napkin diagram launched supply-side tax policy, readily concedes that the growth effects of tax cuts are oversold in the political debate. “Does every tax cut pay for itself? No. I think Irving Kristol wrote that, once — and then did a pretty good job of arguing for it. But if some guy running for Congress in Clayton County, Texas, says all tax cuts pay for themselves, what do we want to do? Go after him with a shotgun? Sure, they’re going to cite me, and there’s very little I can do about it. But there’s the same amount of ignorance on the other side, ignoring the economic feedback effects of tax cuts.”

What’s great about Williamson’s article is that he masterfully walks the difficult line of coming out against supply-side economics but not against tax cuts. The argument is the following: Not every tax cut pays for itself. If they don’t and you don’t cut spending, you end up with a bigger deficit. If they do pay for themselves and you don’t cut spending, it’s likely that the increased revenue will be used for even more spending and the government will grow. So, basically, the theory called “starve the beast” doesn’t actually shrink the size of government.

Full disclosure: I used to believe in the starve-the-beast theory. I used to think that every tax cut paid for itself. I don’t anymore. More importantly, I don’t believe that tax cuts without spending cuts will reduce the size of government.

Does it mean I think we shouldn’t cut taxes if we don’t cut spending at the same time? I don’t know; I am conflicted about that. I love the growth that comes from cutting taxes. I want more of it. Yet I know it’s not enough. Debt matters, too, and spending needs to be cut dramatically, because tax cuts do not starve the beast — the government keeps on spending and growing, no matter who is in power. What I really want is a smaller government. (Actually, what I really want is small government.) Tax cuts alone can’t do. The question is, are they making things worse?

But I think we should be careful not to throw the baby out with the bathwater here. Understood as reductions in marginal income tax rates, the Reagan tax cuts did happen. They did save taxpayers more than $2.5 trillion. They did moderate the upward trajectory of taxes as a percentage of the economy.

The first Reagan tax cut lowered marginal income tax rates by 25 percent across the board. The top marginal income tax rate was eventually reduced from 70 percent all the way down to 28 percent. Income taxes were finally indexed to inflation, eliminating bracket creep. The number of tax brackets was reduced from 14 to just two. Millions of low- to moderate-income Americans were dropped from the tax rolls entirely.

Many of those policies have been eroded — the top tax rate is higher today; there are more tax brackets, as the near-flat tax created by the Tax Reform Act of 1986 didn’t last very long — but none of them have been completely repealed. In addition to the political reasons, this is because there were salutary economic effects. There is a strong case to be made that tax cuts played a role alongside tight money in the policy mix that finally whipped stagflation. And while tax increases to cope with the rising deficit began as early as 1982, Reagan was a net tax cutter and these lower rates were compatible with historic revenue growth over the fullness of time.

This doesn’t change any of Williamson’s main points: We are not as far out on the Laffer Curve as we were before Reagan (though if spending isn’t controlled, we will be again); tax cuts are unsustainable without spending cuts; the Republican Party — with the encouragement of too many conservatives — has increasingly embarked upon a path of high-borrowing “don’t-tax-and-spend.” But Reagan’s tax success was a success. It was simply a success endangered by his failures on spending.

This is an extremely important issue for the future of conservative governance. Eventually, the right will be back in power — whether in Congress, the White House, or both. When that day arrives, conservatives will inherit a fiscal situation that will be dire at best, catastrophic at worst. They can respond responsibly, by eschewing the dream of Reaganesque tax cuts and taking the political risks necessary to actually restrain federal spending. Or they can be irresponsible, and tell themselves fairy tales about just growing our way out the current fiscal hole. The choice is theirs, but it’s the obligation of conservative wonks and intellectuals to give them a shove in the right direction — and good for Williamson (and NR) for doing so.

Interestingly, the European Central Bank just released a new study showing that there are substantial Laffer Curve affects and that lower tax rates generate large amounts of revenue feedback. In a few cases (Sweden and Denmark), the researchers even conclude that some lower tax rates would be in that rare category of self-financing tax cuts. But the key point from this ultra-establishment institution is that changes in tax rates do lead to changes in taxable income. This means it is an empirical question to determine the revenue impact. Here’s a key excerpt from the study’s conclusion:

We show that there exist robust steady state Laffer curves for labor taxes as well as capital taxes. …EU-14 countries are much closer to the slippery slopes than the US. More precisely, we find that the US can increase tax revenues by 30% by raising labor taxes but only 6% by raising capital income taxes, while the same numbers for EU-14 are 8% and 1% respectively. …We find that for the US model 32% of a labor tax cut and 51% of a capital tax cut are self-financing in the steady state. In the EU-14 economy 54% of a labor tax cut and 79% of a capital tax cut are self-financing. We therefore conclude that there rarely is a free lunch due to tax cuts. However, a substantial fraction of the lunch will be paid for by the efficiency gains in the economy due to tax cuts.

Contrary to over-enthusiastic Republicans and deliberately-dour Democrats, the Laffer Curve/supply-side economics debate is not a binary choice between self-financing tax cuts and zero-impact tax cuts. Yes, there are examples of each, but the real debate should focus on which types of tax reforms generate the most bang for the buck. In the 1980s, the GOP seems to have the right grasp of this issue, focusing on lowering tax rates and reducing the discriminatory tax bias against saving and investment. This approach generated meaningful results. As Nobel laureate Robert Lucas wrote, “The supply side economists, if that is the right term for those whose research we have been discussing, have delivered the largest genuinely free lunch that I have seen in 25 years of this business, and I believe we would be a better society if we followed their advice.”

But identifying and advocating pro-growth tax reforms, as Williamson notes, is just part of the battle. The real test of fiscal responsibility if controlling the size of government. Republicans miserably failed at this essential task during the Bush year. If they want to do the right thing for the nation, and if they want to avert a Greek-style fiscal collapse, they should devote most of their energies to reducing the burden of government spending.

Obviously there are benefits to cutting taxes when those taxes have reached truly burdensome levels, but unless spending is also curtailed, this is hardly an act of fiscal conservatism. Nor does starve the beast work in a system in which the primary goal of all lawmakers is reelection. Williamson points out that it’s easy to sell tax cuts but nearly impossible to sell reductions in spending. He suggest conservatives “develop a rhetoric in which “spending” and “taxes” are synonyms, so a federal budget with $1 trillion in new spending means $1 trillion in new taxes — levies on Americans today or on our children tomorrow, with interest.”

In the meantime, serious politicians in both parties need to stop passing the buck. At some point we’re going to need to come up with new revenues from higher taxes or new taxes like the VAT. We’re also going to need to cut spending – and not just around the edges. Entitlement spending and defense spending are not only cash cows but sacred cows, and until we have legislators brave enough (or stupid enough) to go after those, we’re going to keep barreling headlong toward fiscal insolvency. Some combination of spending cuts and tax increases is in our future. The question is only a matter of when.

I am made only slightly more optimistic by the fact that this is an article in the National Review, a place not well known for its questioning of GOP orthodoxy.

Obviously, I don’t share the conservative movement’s goals. The trouble with the right’s embrace of magical thinking is that it makes even negotiation over the size of government impossible. In a rational world, Democrats and Republicans should be able to define their desired level of taxes and spending and meet somewhere in the middle. But this negotiation is impossible as long as Republicans continue to be so detached from fiscal reality that they can’t even advance their own interests.

Anti-tax absolutists still have a firm firm grip upon the Republican Party and the conservative movement. They have spent a good thirty years drumming magical thinking on taxes into the skull of every dittohead, Young Republican, Fox News watcher, or admirer of Ronald Reagan or George W. Bush. It will take a long, long time before the party is ready again to enter have a discussion of fiscal policy that merely engages with reality. But Williamson’s article is a pretty remarkable first step.

Using recipient report data from Recovery.gov, as well as economic and political data from the Bureau of Labor Statistics, the Census Bureau, GovTrack.us, and others, I have compiled a series of facts about stimulus spending. The complete dataset used for this report is available for download at Mercatus.org — it covers the fourth quarter of the calendar-year 2009 Recovery Act contracts and grants only — but here are the main facts.

First: The idea behind the $787 billion stimulus bill is that, if the government spends money where it is the most needed, it will create jobs and trigger economic growth. Hence, we should expect the government to invest more money in districts with higher unemployment rates.

Controlling for the percentage of the district employed in the construction industry, a proxy for the vulnerability to recession of a district, I find no statisticalcorrelation for all relevant unemployment indicators and the allocation of funds. This suggests that unemployment is not the factor leading the awards. Also, I found no correlation between other economic indicators, such as income, and stimulus funding.

Second: On average, Democratic districts received one-and-a-half times as many awards as Republican ones. Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts ($122,127,186,509 vs. $46,139,592,268). Republican districts also received smaller awards on average. (The average dollars awarded per Republican district is $260,675,663, while the average dollars awarded per Democratic district is $471,533,539.)

Of course, there are more Democratic districts than Republican districts in the Congress. So I checked for the correlation between political indicators and stimulus funding. I found that with the exception of the district’s party affiliation (whether the district’s representation was Republican or Democratic), political variables had no effect on stimulus funds allocation.

So how much did party affiliation matter? Well, while the effect was significant, because of the specifications of the model more confidence should be placed in the relationship between the two variables than on the quantification of that relationship. In other words, while we know that whether the district is represented by R or D mattered for funding, I can’t tell you how much this factor mattered compare to other factors.

Third: In this second quarter for which Recovery.gov reports are available, over 65,000 contracts and grants were awarded. The total spending topped $170 billion.

Fourth: The total number of jobs claimed as created or saved overall by the stimulus actually declined from last quarter, shrinking from about 634,000 to a little over 597,000.

This job shrinkage could be the result from changes made by the White House to its method for counting jobs. However, I doubt it. The new job count considers that every job paid for with stimulus dollars is a job created. This logic applies to pay raises.

Five: I found that an average cost of $286,000 was awarded per job created, a 16.3 percent increase over the previous period.

I received many emails on Friday and this weekend about the data published here showing that on average Democratic districts are getting almost twice the amount of stimulus money than Republican districts. Republican districts also received smaller awards on average. The average dollars awarded per Republican district is $260,675,663, while the average dollars awarded per Democratic district is $471,533,539.

Several readers asked if the difference could be explained by the fact that Democratic districts have many more people than Republican districts have. So I looked at the numbers and here is the result. It’s not.

Republican districts get $362 per capita on average

Democratic districts get $692 per capita on average

Also, on average, Democratic districts received one-and-a-half times as many awards as Republican ones. Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts ($122 million vs. $46 million). Of course, there are more Democratic districts than Republican districts in the Congress.

Is the politics part of the allocation decision?

Well I checked for the correlation between political indicators and stimulus funding. I found that there are no effect of political variables (leadership, tenure in office …) on stimulus funds allocation with one exception: the district’s party affiliation (whether the district’s representation was Republican or Democratic) does matter.

So how much does party affiliation mattered? While the effect is significant, because of the specifications of the model, more confidence should be placed on the relationship between the two variables then on the quantification of that relationship. In other words, while I am confident that whether the district is represented by R or D matters for funding, I just can’t tell you how much this factor matters compared to the other factors that went into the allocation decision.

Not only that, but the number of jobs “created or saved” has actually declined in the last quarter, leaving the amount of money spent per job at a cool … $286,000. As for the accusation of political favoritism, I’ll defer to de Rugy since she’s the economist, but I actually never understood the stimulus to be targeted specifically at districts where unemployment was highest. My understanding was that, yeah, the money would be spread around the country, but that the intended effect was systemic: Money directed to district X would stimulate its economy, which would in theory increase demand for goods or services produced locally or in far-flung district Y, just as an injection in the arm can be aimed at curing a problem in some other part of your body via circulation. But even assuming she’s right, is it safe to draw an inference of favoritism? Here’s what USA Today reported in July 2009, shortly after our Keynesian experiment got up and running:

Counties that supported Obama last year have reaped twice as much money per person from the administration’s $787 billion economic stimulus package as those that voted for his Republican rival, Sen. John McCain, a USA TODAY analysis of government disclosure and accounting records shows. That money includes aid to repair military bases, improve public housing and help students pay for college…

Investigators who track the stimulus are skeptical that political considerations could be at work. The imbalance is so pronounced — and the aid so far from complete — that it would be almost inconceivable for it to be the result of political tinkering, says Adam Hughes, the director of federal fiscal policy for the non-profit OMB Watch. “Even if they wanted to, I don’t think the administration has enough people in place yet to actually do that,” he says…

The imbalance didn’t start with the stimulus. From 2005 through 2007, the counties that later voted for Obama collected about 50% more government aid than those that supported McCain, according to spending reports from the U.S. Census Bureau. USA TODAY’s review did not include Alaska, which does not report its election results by county.

The report concluded that the money was doled out “guided by formulas that have been in place for decades and leave little room for manipulation.” Sure would be nice to see a follow-up piece springboarding off of de Rugy’s work now that we have another nine months of data in the bank. I’m sure everything’s kosher: Surely a president who showed such fierce resistance to special interests during the ObamaCare process wouldn’t let political considerations affect his stimulus awards.

De Rugy rightly points out that she can’t account entirely for the statistical relevance of party affiliation but that the data strongly suggests a political element in the granting of stim, money contracts.

I’d love to see a study on a comparison between the economic health of areas that received stim money and those that didn’t. I’ll bet that kind of analysis would show no difference between those who got the pork and those who didn’t.

The study, by Veronique de Rugy of George Mason University and the National Review, claims that congressional districts which elected a Democrat to the Congress received a larger amount of stimulus finds by a margin which is statistically significant even after controlling for certain other effects like the unemployment rate. However, the study does not control for at least one other variable that is overwhelmingly important in determining the dispensation of stimulus funds.

The variable in question is in fact pretty obvious if you simply look at the districts that have received the largest amount of stimulus money, according to de Rugy’s dataset.

The district that received the largest amount of stimulus funding in the 4th Quarter of 2009, according to de Rugy’s tally, is California’s 5th Congressional District. Is there anything notable about the 5th Congressional? Well, it is home to the state capital, Sacramento. Let’s keep that in mind.

Next on the list is New York’s 21st Congressional District. The largest city in the 21st is the state capital of New York, Albany.

Third is the 21st Congressional District of Texas. It contains parts of Texas’ state capital, the wonderful city of Austin. (Another district that contains parts of Austin — the 25th — ranks 14th on de Rugy’s list.)

At this point, it ought to be pretty obvious what is going on. The three districts receiving the largest amount of stimulus funds are home to the capitals of the three largest states — New York, California, and Texas. Let’s pause for a moment and make a bold prediction. I’ll bet you that the district that ranks 4th on the list will contain the capital of the 4th largest state, Florida.

Bingo. Up 4th on the list is Florida’s 2nd Congressional, home to Tallahassee.

Fifth is Pennsylvania’s 17th, which hosts the state capital, Harrisburg.

The sixth through tenth districts contain the capital cities of other large states: Ohio, Georgia, Michigan, Illinois and New Jersey, respectively. They are followed by districts that include the state capitals of Indiana, Tennessee, Virginia — then another part of Austin, Texas — then Arizona, Missouri, North Carolina and Wisconsin. Finally, in 19th place is South Carolina’s 3rd Congressional District, which does not host a state capital. (Ironically, it has elected a Republican — J. Gresham Barrett — to the Congress).

This, of course, makes perfect sense. A lot of stimulus funds are distributed to state agencies, which are then responsible for allocating and administering the funds to the presumed benefit of citizens throughout the state. These state agencies, of course, are usually located in or near the state capital.

[…]

That de Rugy has testified before Congress on the basis of her evidence, and never paused to consider why the top five congressional districts on her list overlap with Sacramento, Albany, Austin, Tallahassee and Harrisburg, is mind-boggling. The presence of a state capital is the overwhelmingly dominant factor it predicting the dispensation of stimulus funds. This could have been discerned in literally five minutes if she had bothered to look at the apparent outliers in her dataset and considered whether they had anything in common — a practice that should be among the first things that any researcher does when evaluating any dataset.

Nate Silver, the respected blogger at 538.com, has taken issue with my study of how stimulus funds have been disbursed. This is a good thing, because we really need to have more discussions to determine where the stimulus dollars are goingand why they might be headed in particular directions. In fact, this is the reason why all my data is up at the Mercatus Center website for everyone to see and discuss. This is also why I have detailed my methodology in the paper. This report is part of a series that will come out every quarter as more data becomes available, and it is a work in process.

Mr. Silver characterizes the findings in my study by saying, “My bet is that this is all a bunch of noise resulting from an incomplete — and possibly deliberately biased — research design.”

However, there is more to my analysis than Mr. Silver’s post suggests.

1) I agree with Mr. Silver that checking for urban/rural populations and race may be a good idea, and I’d like to re-run the regressions per his specifications. I will gladly give him the Stata printouts when I am done.

2) I will also check for state capitals. While is no doubt that since the reporting only includes primary and sub recipients, it might be the case that money is being disbursed from the capitals. However, after skimming government documents about how the money is allocated there is no clear evidence that this is the case. I will look into it with Mr. Silver’s comments in mind.

I worked within the confines of $18 million Recovery.gov website, a website that we were promised would allow us to track the money to the last cent. Obviously, that is not the case. The money trail ends at the level reported, and from the website one cannot tell where the money went next.

As for this point alone being evidence of a lack of political bias, I would like to quote Mr. Silver’s own words: “By the way — if you throw out the districts that are home to state capitals, those which elected Democratic members to Congress still rank higher, receiving 31 percent more stimulus funds, on average, than those which elected Republicans. So, perhaps there is hope for her analysis yet.”

So even after I use his methodology I will find that Democratic districts, other than state capital ones, are getting 30 percent more than Republican ones. That does seem like a possible political bias to me, which would be worth looking into.

How much of a bias? I don’t know. Let’s not forget that my take on the data has always been the following: The regression analysis shows that district’s party representation matters. However, I cannot say how much it matters compared to other factors (such as the formula used by different agencies). I said it loud and clear each time I presented my findings. Indeed, I explained it in plain language to Chairman Oberstar last Friday when I testified before his committee.

If it is not possible to nail down the precise amount that party affiliation matters, does anyone truly want to argue that there are no political factors influencing this stimulus or stimuli in the past (whether put into place by Republicans or Democrats)? There is a lot of literature in economic-history journals on similar patterns in New Deal spending, and it consistently shows that New Deal spending correlated rather strongly and negatively with the margin of votes in the previous election. Areas where Roosevelt won by a little got more New Deal bucks than ones where he won by a lot. (I was directed to one article in particular by a reader this morning, and it is worth looking into: Price V. Fishback, Shawn Kantor, and John Joseph Wallis’s “Can the New Deal’s Three Rs Be Rehabilitated?: A program-by-program, county-by-county analysis.” Explorations in Economic History 40 (2003), pp. 278-307.)

I am confident that a similar pattern can be found with President Bush’s stimuli, which, by the way, I was publicly and consistently against.

Veronique de Rugy has issued a fairly gracious response to my critique of her study on the disbursement of stimulus funds, the crux of which was that she had failed to account for a variable (the presence of a state capital) that was extremely important in predicting the allocation of stimulus funds (because much of the money is intermediated by state governments).

Most importantly, she has promised to evaluate some of my concerns and to re-run her analysis. This is terrific — and she is to be commended for her responsiveness. de Rugy is also to be commended for having released portions of her dataset** on the Mercauts Center website (something which she had done originally). Nevertheless, some further comment on her response — and the issues in research design that her study raised — is warranted:

— I share de Rugy’s disappointment with the quality of the data available at recovery.gov. Frankly, I am not sure that testing her hypothesis to a peer-reviewable level of robustness is possible given the middling quality of data and the inherent ambiguity with how particular projects must be assigned to particular congressional districts.

— de Rugy writes: “The unemployment data for the regressions has in fact been used by congressional district, not by MSA. The confusion comes from the fact that the Excel file on the website includes unemployment by MSA.” Good: that particular issue is cleared up, as well as the reason for my confusion.

— For me, personally, the notion that the allocation of stimulus funds could have reflected a broad-based and widespread effort to benefit districts represented by Democrats seems implausible — something which is well worth examining but something which should have received especially rigorous scrutiny. This is particularly so given that many of the funds were intermediated by state governments, not all of which are controlled by Democrats, as well as federal agencies that were constrained by formula rules.

There are two other variations that I find less impluasible:

I find it less impausible that the funds could have been directed toward those sorts of districts which tend to vote Democratic (e.g. as measured by PVI or by Obama vote share) — even after controlling for other demographic variabes — a possibility that de Rugy raises in her response but which was not the focus of her hypothesis. The difference is that that this could have resulted from a sort of unconscious bias in the design of the stimulus rather than a deliberate conspiracy.

I also find it less implausible that some *particular* projects could have been directed toward those districts that had a Democratic representative who was either especially influential or who a key swing vote in the House. (This is what we call pork.) However, de Rugy ran various tests on the types of Democratic districts that benefited from the stimulus and did not find any relationships with the characteristics of the Democratic members of Congress that tended to represent them.

Wow. Read Nate Silver’s takedown of a study that’s been making the right-wing rounds, claiming that stimulus funds have been funneled to Democratic districts. It turns out that most of the districts receiving big funds are Democratic, but that’s because … most of them are districts that include state capitals (usually urban, and typically Democratic), and a lot of the aid is funneled through state governments.

Nate’s analysis shows that the underlying study was ludicrously wrong, but not that it was dishonest. But the response by Veronique de Rugy of George Mason is inconsistent with any attempt to do honest work. When someone points out that the result you’ve trumpeted is actually a data artifact, the correct response is “Ooops!” not “The dataset made me do it!”

If Ward Churchill deserved to be fired for scholarly misconduct (as opposed to his obnoxious opinions) so does de Rugy. No one even vaguely competent would have made such a blunder, and no one even approximately honest would have done anything but make a forthright retraction once it had been revealed.

Of course there’s a big overlap between the wingnuts who have been trumpeting “climategate” and the wingnuts who claimed that de Rugy had found the smoking gun proving that the stimulus bill was just Democratic pork. You can count on them not to correct either of their false assertions.

In fact, the argument that Republicans are footing the bill for lavish spending on Democratic states might be backward. Harvard’s Jeff Frankels finds that the relationship between federal spending and conservatism in the states actually flows in the opposite direction: conservative states get more government largess per buck.

He plots the relationship between federal expenditures per dollar of taxes paid on the X-axis (2005 data) against percent of Republican votes per state on the Y-axis. In other words, as you move to the right along the X-axis, states receive more federal spending per tax dollar. As you move north on the Y-axis, states get more Republican. Here’s the graph:

To follow up on Tim‘s discussion of Nate Silver‘s takedown of Veronique de Rugy‘s bogus study claiming to find that the stimulus has been distributed in a partisan way, this is yet more evidence that the Internet is awesome.

In the old days, a completely disingenuous argument like De Rugy’s would find its way into influential hands due to her institutional connections with establishment Republicans, get repeated a million times, and perhaps even have an impact on future debates. It would be countered only by somebody at a liberal think tank, who might write a paper showing why it was wrong, and nobody would notice. But now, the mighty Nate Silver, who has a tremendous amount of credibility built not on connections with important people but solely on merit, can quickly gut de Rugy’s argument like a trout, and people will actually notice. That’s because he has a large audience that he’s built up without any kind of institutional support. I’m guessing Rachel Maddow will do a segment on this tonight, and pretty soon de Rugy will be utterly discredited. Or we can hope, anyway.

Witness the fruits of bipartisanship! The Senate jobs bill passed a key hurdle yesterday with five Republican votes, including newly minted GOP Sen. Scott Brown of Massachusetts. This wasn’t the crucial vote, mind you, but rather a vote to allow voting. Yet the press is treating the event not unlike a solar eclipse. Read only the headlines, you could be forgiven for thinking the official name of the Senate bill was in fact the Scott Brown Voted For This! Act.

Eh, would be my answer. To provide some context, this bill is Sen. Harry Reid’s $15 billion response to the Sens. Baucus and Grassley’s $85 billion bipartisan retort to the House Democrats’ $150 billion jobs plan. It’s like the baby girl within the Russian nested dolls, sharing the resemblance, if not the impressiveness, of its babushkas.

Yes, sigh, Scott Brown. Looks like he hasn’t taken up my suggested D.C. itinerary. But those of us who knew all along what we were getting — a game-changer who vowed to torpedo Demcare, but who was not an ideological conservative — are not surprised. And I pointed out Brown’s moderate record several times on Fox and on this blog during the campaign.

What I want to know is: When will all the lefties who are now gloating and praising Brown retract all the hysterical attacks on him as a “radical” “right-winger?”

When Scott Brown starts crafting national health care legislation, or sounding like the liberal lion of the Senate, get back to me. Until then, it’s Massachusetts. We’re still a long way ahead on the deal. Winning the seat was more than worth it.

Well, look. Obviously he needs to signal the left-leaning indies back home who voted for him that he’ll break their way sometimes. Even armed with a huge war chest for 2012, he ain’t getting reelected as a party-line Republican. In which case, two reasons why this might not be a bad time to throw a vote to the Dems. One: The bill might not pass, even with Brown’s vote. Because of Frank Lautenberg’s illness, Reid only has 59 at the moment with the roll coming up later tonight. If Brown can prove his “bipartisanship” on a bill that’s going down in flames anyway, sweet. Two: Even if it does pass, Reid already had to pare the bill all the way down from $85 billion to just $15 billion to keep the heat from fiscal conservatives off of his caucus ahead of November. What’s left won’t do much to create jobs, but then, that’s not really the point; the point is to give Dems some sort of cosmetic measure to point to in the run-up to the midterms so that they can say, “See, we’re trying to create jobs!” Brown’s strategy, essentially, is to use that logic against them by throwing them a vote he can use to try to keep the seat red in two years.

On the other hand, Brown could also have taken a principled stand that Reid was making a mockery of the new bipartisanship, and apparently trying to siphon off revenue for that health care thing. Which makes this, theoretically, less a vote for tax cuts and jobs than it is a vote for financing Obamacare. Which at last check is what Brown was sent to put the brakes on.

I know, he thinks he’s there to rewrite that bill. Good luck with that, Scott. Maybe he thinks it will be politically useful, long term with the voters and shorter term, giving him a little leverage with the admin in the health fight coming up.

In any case, there will be tougher votes ahead that will say more about Brown, his politics, his backbone and his relationship with his constituents. But anyone who thought Massachusetts elected Rush Limbaugh for the Ted Kennedy, excuse me, I mean the people’s seat, is dreaming, anyway.

The flip side of that is giving them anything to crow about at all … letting them claim they’ve accomplished bipartisanship when they actually undercut it. The president may have been a tad cautious about it tonight, but in a week or two, after it’s done, it’ll be like … I dunno, like he won the Iraq War or something.

This bill won’t have much effect on the economy. Shouldn’t Republicans grasp that, at this stage? I understand that the bill featured four provisions that might sound appealing to Republicans, and to anyone who doesn’t understand basic economics, including a measure exempting businesses hiring the unemployed from Social Security payroll taxes through December and giving them another $1,000 credit if new workers stay on the job a full year.

Let me explain in simple words. These tax credits are a brilliant example of bipartisan nonsense. If your business is slow, and your customers are not buying your goods and services, it is likely that your tax liability will be significantly reduced or even nonexistent. No tax liability, no need for a tax credit. Better yet, no customers, no need for employees, tax credit or not. (Duh.)

Oh, and by the way, economists at the National Federation of Independent Businesses, the largest association of small business owners in the country, have been saying for months that this is not what businesses need right now

If Scott Brown wants to help the economy recover, he needs to understand that giving with one hand while stealing big time with the other hand won’t do it. What do I mean? Well, extending useless tax credits on the one hand while the president is proposing big tax increases for those earning more than $250,000 a year on the other. And, of course, those tax increases will include all the small business owners that report their business income as individual income.

It isn’t just that he comes from blue, blue Massachusetts, where voters have certain expectations — a justification we constantly ascribe to fellow New Englander, Sen. Olympia Snowe, a woman whose angular features belie the soul of a really squishy squish. I am guessing that Scott Brown believes that he cannot simply join the (highly effective and admirable) “no” chorus of Republicans, lest he be labeled a pure obstructionist and not an independent kind of guy who’s just looking for effective solutions to get the working men and women of Massachusetts back to work.

If that is his reason, we will not see much more of this. And getting the “compromiser” votes out of the way with a relatively unimportant jobs bill, rather than a serious bailout or tax bill, is a cheap solution. If this is a conscious strategy to build a reputation as a “pragmatist” and not an idealogue, a guy looking for solutions and not a purist — well, let’s hope that he confines the votes needed to maintain that image to less serious matters.

Cynical? “Calculated” is a better word. And let’s remember that our hero is, after all, a career politician.

Of course, there is the possibility that he really doesn’t get it. In that case, a little help and advice from the guiding hands that helped him get elected might be in order.

In only his second Senate vote, Republican messiah Scott Brown helped the Democrats destroy a Republican filibuster on the new Jobs Bill, hahahahah, what? And guess who’s cold goin’ nuts on the Twitter?

If enough of Scott Brown’s girlfriends break up with him on Twitter at the same time, does Obamacare automatically pass?

The definition of insanity is to do the same thing over and over again, expecting different results. Here is a good example of insanity: The Washington Post reports a “proposed tax on large banks, which President Obama plans to announce on Thursday, is intended to constrain risk-taking and discourage outsize bonuses, in addition to recouping some of the cost of the government’s various bailout programs, officials said.” The officials said the administration “wants to collect about $120 billion from banks over 10 years, taxing banks based on the amounts they have borrowed to finance lending and other activities.” The administration “plans to include the proposed tax in the budget it delivers to Congress in February,” but what “emerges from Congress, however, could be markedly different.”

Indeed. The Hillreports that House Financial Services Chairman Barney Frank “is mounting a new effort to limit executive compensation as Wall Street prepares this month to pay out huge bonuses.” Frank, “said he is looking at levying new taxes or fees on financial firms as well as ways to further empower shareholders to restrict pay.” Frank, “called a hearing for Jan. 22 and said he is not convinced by arguments that restrictions would hurt the industry by forcing well-paid employees to go elsewhere.”

Seriously, what are they thinking about? Can’t the administration and Frank see that these types of measures will only hurt the recovery? The only effect of this tax will be to soak equity out these institutions limiting their ability to recover and issue loans. Plus haven’t most of these banks repaid the money they were forced to take from the government? With interest, no less.

And if Mister Frank really believes that chasing well-paid employees to go elsewhere is a winning strategy and won’t have any impact on the industry, then I suggest that next time he is sick he goes to a hospital where doctors are poorly paid and see how he feels about that.

This anti-capitalist and anti-wealth mentality is scary and very anti-American.

“I don’t know where people would go for comparable salaries,” Frank said. “I guess perhaps they could star in major motion pictures.”

But National Review’s Veronique de Rugy sees it as an “anti-capitalist and anti-wealth mentality [that] is scary and very anti-American.”

Hey, you know what else is anti-American? Being named “Veronique de Rugy.”

I digress. Anyway, de Rugy offers this riposte to Frank:

if Mister Frank really believes that chasing well-paid employees to go elsewhere is a winning strategy and won’t have any impact on the industry, then I suggest that next time he is sick he goes to a hospital where doctors are poorly paid and see how he feels about that.

Of course, Frank didn’t say that reduced pay would have no deleterious effect on the quality of any profession, he said it about the finance profession. It’s telling that de Rugy changed the subject from finance to medicine. Exactly what horrors does she think would occur if we had less brilliant people flocking to the finance industry? We’d wind up with a bunch of hacks who, I don’t know, crashed the world economy because they never considered the possibility that historically sky-high housing prices might drop?

Jon Chait and I both likes it when Barney Frank dismissed concerns that a bank tax would drive talent out of the industry by quipping “I don’t know where people would go for comparable salaries, I guess perhaps they could star in major motion pictures.”

Veronique de Rugy begs to differ, saying “This anti-capitalist and anti-wealth mentality is scary and very anti-American.” Chait retorts “Hey, you know what else is anti-American? Being named ‘Veronique de Rugy.’”

My Googling has, however, revealed something even more disturbing — Veronique de Rugy is literally not an American. She’s French. She holds a PhD from the University of Paris-Sorbonne and is the author of an un-American book with the suspiciously French title Action ou Taxation. It’s true that she agreed to betray her native land by making this France-bashing video, but that doesn’t change the basic facts. Barney Frank is as American as an actual American.

Now, let’s unpack this. On the one hand, Chait and Yglesias just might think that people who are not from America should shut up, in which case they’re idiots. Or maybe they’re trying to be ironic, in which case they’re idiots. Or, if that’s too harsh, either they’re dim, or they’re dim.

Option one:

Yglesias and Chait are idiots (or just dim). They think that mocking people for unusual names is funny, or that only authentic Americans (perhaps native-born, so I don’t qualify, either, or citizens, or whatever) can or should ever make statements about what it is to be an American. That would qualify them as knuckle dragging neanderthals, that is, as idiots.

However, it’s worth considering whether Chait and Yglesias are attempting to be ironic. (I am going to be very careful here, as I recently criticized two dunderheads for their failure to understand the use of irony by a colleague).

So, Option Two:

Chait and Yglesias are trying to turn the tables on those who charge that X or Y is “un-American” (or “anti-American,” in Vero’s phrasing) by returning the favor. Ha ha, some may think. How clever. Yet, upon reflection, it would seem that, if that is their intent, they are too dim to understand the difference between A) calling, say, unequal treatment by the law “un-American” for violating the Constitution and the best core principles of the American tradition, and B) calling the serving of “saucisses et choucroute” “un-American,” in contrast to, say, “hot dogs and sauerkraut” [note the double irony, guys]. Vero criticized special laws punishing people for high incomes as un-American, in the way that one might call censorship “un-American” (Think! Think! The First Amendment is an amendment to the Constitution of the United States of America); she did not remark that Hindus, or Catholics, or Scientologists, or sauerkraut are un-American, or use the term in any of the other ways in which the epithet “un-American” is slung around by knuckle-draggers, who confuse “America” with cuisine, or religion, or other inessential matters, rather than with principles of government, of liberty, and of justice.

Or maybe they’ve just put their feet in their big mouths and owe Veronique an apology. I doubt it would erase the embarrassment they should feel, but it would be the decent, French thing to do.

Given that Tom G. Palmer is a self-described friend of de Rugy’s, a proprietor of a blog entitled “personal website and weblog of the libertarian thinker,” and a man who insists on using his middle initial, his failure to appreciate the joke was probably overdetermined. So, to briefly explain: no, I have no problem whatsoever with people from other countries commenting on American politics. I do find the tendency to describe any deviation from the right-wing agenda as “un-American” or “anti-American” to be cheap demagoguery. Ideas should be evaluated on their merit, not their “American-ness.” And when that particular sort of cheap demagoguery is being employed by somebody named “Veronique de Rugy,” yes, I think it’s kind of funny.

Now, I should point out that my little quip about de Rugy was just the prelude to a more substantive takedown that I’d be eager to to see her or one of her defenders attempt to engage. De Rugy insisted that anything that might reduce salaries in the financial industry could have devastating consequences: “if Mister Frank really believes that chasing well-paid employees to go elsewhere is a winning strategy and won’t have any impact on the industry, then I suggest that next time he is sick he goes to a hospital where doctors are poorly paid and see how he feels about that.” I found it interesting that de Rugy couldn’t directly defend the necessity of massive Wall Street salaries, which seem to have added massive negative value to the American economy. Instead she made an analogy to medicine, but even that analogy was highly flawed — doctors in France, her home country, make far less money, yet produce medical care that’s of sufficiently high quality that even American libertarians who experience it concede its superiority. So entirely apart from de Rugy’s belief that it’s anti-American to make Wall Street pay back some of its subsidy, the whole rationale undergirding her epithet fails at multiple levels.